Step 5: The Chapter 7 Discharge

Step 5: The Chapter 7 Discharge

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In Chapter 7 bankruptcy cases, “discharge” can be referred to:

  • The discharge (forgiveness) of debts like credit card and medical bills
  • The discharge (exit) from bankruptcy protection

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Be sure to also check out the following information about the discharge of debts through Chapter 7 bankruptcy.

The Chapter 7 Discharge of Debts

Those who file under Chapter 7 of the U.S. Bankruptcy Code are eligible to receive a discharge of debts. Here, the discharge refers to the permanent retirement of certain types of debt.

This means that the court forgives these debts and you are no longer obligated to pay them — ever.

The types of debt that may be eliminated – or discharged – by filing Chapter 7 bankruptcy include:

  • Credit Card Bills
  • Medical Bills
  • Payday Loans
  • Personal Loans
  • Some Signature Loans
  • Utility Bills
  • Back Rent

These debts are considered unsecured debt, and Chapter 7 bankruptcy is designed to address these with force.

However, it’s important to keep in mind that some types of debt can’t be excused by the court during a Chapter 7 case, which includes:

  • Tax Debt: In most cases, filers must pay debts owed on taxes. Ask a Chapter 7 bankruptcy lawyer about the exceptions to this rule.
  • Student Loans: Unless you can prove that paying your student loans would cause you “undue hardship”, they can’t be discharged in Chapter 7 bankruptcy.
  • Child Support & Alimony: Money owed to an ex-spouse for support is non-dischargeable.
  • Marital Debts: Debts you undertake in the course of a divorce or separation are not eligible for the Chapter 7 discharge.
  • Criminal/Legal Fines & Penalties: Any amount you owe as a criminal or legal obligation is non-dischargeable in bankruptcy court.
  • Certain Luxury Consumer Debt: The purchase of any luxury item costing more than $500 made within 90 days of your bankruptcy filing, as well as any cash advance totaling more than $750 taken on within 70 days of your bankruptcy filing, can’t be discharged.
  • Fraud/Intentional Torts: Any debt you took on under false pretenses is non-dischargeable. However, if you were the victim of lender’s fraud, you should ask a bankruptcy attorney to help you petition the court to allow the debt to be discharged.

If you have significant debt that cannot be addressed by Chapter 7, then you may need to speak with a lawyer about Chapter 13 bankruptcy, which can address different types of debt.

Chapter 7 Discharge: The Exit from Bankruptcy

The other type of Chapter 7 discharge is the completion of the bankruptcy process and the exit from bankruptcy protection.

If you go by the books and refrain from concealing assets or taking on major debt at the last minute, you should be able to receive your discharge within 6 months of filing Chapter 7 bankruptcy.

In fact, some filers find that it only takes them a few months to receive a discharge of their debts.

Your discharge is your key to a fresh start. Once your Chapter 7 bankruptcy discharge takes effect, you’re ready to start your new financial life.

In order to receive your discharge in a timely manner, it’s important to follow the advice of your Chapter 7 bankruptcy lawyer.

For a more detailed look at what you’ll need to do, take a look at the Chapter 7 timeline, which outlines the weekly requirements in a Chapter 7 case. Or, you can always speak with a local Chapter 7 bankruptcy attorney for more details.

Filing Chapter 7 Bankruptcy Steps